With the arrival of Peak Oil, the curtain has closed on Act 1 of the drama Petroleum Man. What will happen in Act 2? Chekhov said, "If there's a gun on the wall at the beginning of the play, by the end it must go off." In the world's nuclear arsenal are many guns on the wall. If life copies art, will there be an Act 3 in which the players, having learned their lesson the hard way, live sustainably? To explore these and other questions... FTW's Act 2 Blog. Read, comment, take heart! Orkin

Friday, March 19, 2010

Water Insecurity Critical in Arab Region; If Spain Goes Down, the Entire Global Economy Is Toast

“The uncertainty surrounding the settlement demonstrates yet again the urgent need for Congress to pass the Zadroga Act, which would provide guaranteed health care and an estimated $6 billion in compensation for those who lost their health as a result of the 9/11 attacks. "

I've been doing a lot of thinking over the past 4 months in an attempt to string all the pieces of the economic puzzle together. I could be completely wrong but I think the Chinese have peaked and this is the height of their economic power. What's next is the bubble bursting in China, civil unrest and the potential for the dismantling of their industrial base as revolution grips the country. It may take a few years but I see it.

We've reached peak oil which means simply enough unless we increase our economic output per unit of energy consumed the world economy will never grow again. In fact it has to increase it's efficiency in stride with energy production declines. Alternative energy is only giving us some breathing room for the next few years.

What I see taking place is an oil run up explosion. $220+/bbl for the price of oil as the Chinese, Indian, and Brazilian economies continue to boom and by doing so using the extra energy given up by the Western Power's housing bubble collapse. We already saw what $147/bbl did and it may take $220/bbl to pop those economies.

We will see a serious contraction in the Western Economies again, maybe taking unemployment from 20% to 30% with even larger fiscial deficits. I understand the game entirely as to why the US Fed is printing money like no other. By keeping the asset bubble in check in the US, it prevents monitary deflation and strengthing of the US Dollar. This US Dollar strengthening back to a parity with the Euro(if we weren't monitzing the debt) would give the Chinese much larger profits margins on their exports. Their export profits are so razor thin right now that a stronger dollar is in their interest to maintain control of their government. They can't strengthen their Yuan and by entering in barter agreements with third world countries that have resources particularly in S. America and Africa they can export some of their Yuan deflation to keep a slim profit on their exports. The US has the Chinese by the balls right now and no one seems to see it.

As oil runs upto $220/bbl we are going to see food prices skyrocket across the world which will be damaging to China and definitely India. Their costs structures will rise much faster than the US cost structure as a majority of their workers incomes goto putting food on the table. All of a sudden the Chinese export margins become zero if not negative and the volume at which they must sell their goods is so large that a 5% slow down in the US Economy would mean Billions in losses for the Chinese Manufactoring sectors.

Another aspect is the Chinese are attempting to force Western companies to hand over all of their trade secrets and what they can't force them to they are attempting to steal. That's a loser's tactic and if you've read Powershift or Revolutionary Wealth by Alvin Toffler up to date information tech often becomes "obsoknowledge" within a couple of years. The Chinese are burning their bridges making the Indian economy more likely to obtain the IT jobs that would replace the manufactoring jobs that are about to be lost enmass. The Chinese have peaked.

When oil goes to $220/bbl sometime in the next 18 months the entire world will fall again on it's knees and this time the Euro will go with it and the US Dollar will strengthen because the currency infrastructure needed to bi-pass Brenton Woods isn't there yet. Oil crashes to $10/bbl and the US service sectors rebound rapidly in 2012.

You have mentioned a lot of contingencies that can be specualated on, but not guaranteed. My feeling is that there's a lot of oomph left in China, although they are digging their own grave. Naturally, I could be wrong and they might tank early.

The thing we know is that energy resources, food, soil, fresh water, wild lands and minerals are all in decline, and the population is growing, with "developing countries" (sadly) trying to take over the foolish consumerism of the now-hollow West.

Who can belive that will last? What we know, is that serious contraction WILL occur, is occurring, and that, absent any sudden miracle, nothing is going to reverse this in even the medium term.

We can try to guess how collapse will progress, but even the most canny of us will be in for surprises. I like what a scientist told us after his talk on future calamities, when asked what we should do. He said:

Love Life. Open up and and enjoy sharing. Keep your eyes open. Stay light on your feet. Don't be too attached.

Other people have said "buy gold" or "get guns" or "head for the hills", but that man's advice resonated, and has shaped my response to all these possible calamities and weird trends.

Regarding the article mentioning the proposed 3.8% tax on investment income here in the U.S. in order to help fund healthcare, it's always intrigued me that people here in the U.S. pay the lower "capital gains" rate for income tax when they sell their investments for a profit, as compared with the income tax rate they have to pay on their regular income they get from work.

If someone makes $100,000 from selling stock or real estate, why should they be taxed at a considerably lower level than someone who's making that same $100,000 by working?

This is another case of the elite having lobbied successfully a long time ago to receive special treatment because they're the ones constantly playing in the investment arena, as compared with the average person on the street.

spain goes down the whole economy goes, and Idaho to accept silver medallions for taxes seem to be very significant stories these last 2 posts- but my computer closes each time I click on them- is this a conspiracy because they don't want us to read those stories?

Great advice eyeballs.When you are as prepared as it is possible to be, and you know there is not a damn thing you can do on a larger stage, knowing can be paralysing. It's waiting for the other shoe to drop that's been getting to me. Which way will things go in my neck of the woods, can I anticipate? No I can't, there are too many variables.So I have typed up your scientists' advice and pinned it on the wall, just to remind myself to get on with living in the NOW.As for climate change.When we first moved to Australia we lived in Melbourne, which apparently, is so situated geographically that forcasting the weather for the city is a nightmare. I remember hearing on the radio a meteorologist say"I can only give you a possible forecast and my advice is, stick your head out of the window and see for yourself what the weather is".My knowing what a ratshit place the world is turning into doesn't do me much good so I am tending to skip reading most of the reports listed. But I do like to read the comments from all of you out there, I find them interesting and often uplifting.I am hoping that when the new FTW comes on line that there will be space for the likes of myself who, knowing all that shit stuff,just wants to exchange the nitty gritty information on how to have a lifethats more in tune with our veryvery beautiful planet.

I think the one thing that people tend to overlook about China is that they basically have a slave population. Money doesn't work the same way within their economy as it does in ours; so they're not likely to be affected anywhere near as badly by Western collapse as everyone seems to think.

As I said, I enjoy reading what everyone posts here, &/but that does not mean I agree with what some of you post.Some are open minded, willing to change and adapt to what the future brings, recognizing that we can not remember going backwards to a primitive way of life.Others are closed minded and will force the future into their mold, which is the way things have never worked; we have just stumbled from one disaster to the next.Forcing our wishes upon others, dominating, overpowering, cheating, & where none of these work Killing those we (rightly or not) feel superior to!

In the last 200 years our knowledge of disease, physiology, & the working of Evolution have taught us the errors of the past, yet some like to confine (box up), us to the past, and its lack of options.

This blog has posted both side of every issue, some just refuse to look at the other side, or remember it was posted.Stop distracting yourself over it!

I am 75, my wife is 74, we own a health food store, we work full time 7 days a week, raising our 3 grand daughters, & keeping people healthy, alive and educated.We both have "Hoed" more and pulled more weeds than anyone else here.We do not have access to Earth or the time to garden, we are preparing as we are able.At our age we do not expect to see the new World, but for someone to predetermine who should be allowed to have a chance is insane, the one you eject from the "Lifeboat"may be the only one who can build a Fire, or cure your Fever after you burn your boat!The Enemy today may be the only one who can save your Life.

Amae is the reason you are alive, the foundation of the instinct toMother, the bond which gives an infant the will to live/fight tosurvive, Amae can be formed/generated even between Species which would normally Kill/EAT each other.I have posted links, in the past, as proof of Amae between hunter/hunted.

"One of the most brutal things Johnson endured was a captor grabbing her chest. She tells in her book of mobs of Iraqi people coming to view her as a vehicle she was in traveled from town to town, with one villager slapping her and another spitting on her. But while the men enduredbeatings during the captivity, she said she was treated better.

She describes acts of kindness, too, by the Iraqis. One doctor operated on her legs, which she credits with allowing her to keep them. Another doctor early in her captivity whispered to her that a woman Johnson assumed was Lynch was alive, which provided comfort." From;

http://news.yahoo.com/s/ap/us_pow_memoir

What are you doing, intend to do, to preserve your Like & that of those you Love, besides making sure someone else dies, someone "less Deserving"?

Jenna...I'm just curious...How many hours do you spend every week on the average reading potential articles to post on the Blog, posting them and linking to them, and reading our posts and then forwarding them onto the Blog?

Whatever this amount of time is, once again a massive "Thank You" from me for all the time you devote to doing this for all the rest of us.

I was watching the video that went along with this, and listening to all the talk about: "What people think the banks should do to make up for their role in the financial crisis."... And just listening to the people calling in got me thinking about how little people actually know about the "moneyed-class".

My parents were fairly wealthy. I grew up in a house that looks like "Tara", from Gone With The Wind; my dad was a mortician, but he made most of his money on the stock market; everybody had their own late-model Cadillac; etc...

My mother had a pet phrase for anyone who didn't fit into her tax bracket: "Scum Of The Earth". The thought that justifies this, in her mind, is that: "Unless you are willing to do what it takes to 'succeed' in this life (meaning: able to acquire as much stuff as you can, while defeating all other contenders), you aren't worth the time of day!" This very thought resonated through every dinner party, luncheon date, bridge-club meeting, golf outing --you name it-- that I was ever privy to.

So, the question: "Don't they care?" strikes my ears as one of the most uneducated questions a person could possibly ask!

In the film Collapse, Mike quoted the Bible as his life's revelation, saying: "For the love of money is the root of all evil". Few people, it would seem, know how absolutely correct that observation is.

the one you eject from the "Lifeboat"may be the only one who can build a Fire, or cure your Fever after you burn your boat!The Enemy today may be the only one who can save your Life.

Absolutely. We can't expect all the elders to get out with shovels and grow all their own food. In fact, it would be commical, some people doing gardening. You wouldn't want a lot of amateurs practicing dentistry, either, just because that's obviously an important skill. Some degree of specialization is bound to be viable for the near term.

And the thing we need from others may not manifest for some time, as per a resume. It might just be that you can trust them with your kids and they're smart and steady enough to encourage the household to stay productive and kind and happy through hard times. They might be handy around the homestead, they might be excellent cooks.

As I go through these possible uses a person could have, I'm encouraged to develop some of my latent talents and overcome some of my obvious lacks. Survival of the fittest does not mean the meanest and toughest. It could be that the survivors will largely be those who were desirable enough to other competent humans.

Eyeballs, I humbly suggest that in a state of confusion competent individuals will form into groups and take appropiate actions to identify threats. When faced with a threat competent groups will overcome that threat, because to fail would indicate incompetence. The degree to which the response matches the threat is a measure of the level of competence. Eventually only competent groups will remain. Ain't Darwinism a bitch. Competence will be defined by the nature of the threats. qed, competence requires flexibility above all other attributes.

Competent people, sure 'nuff. But as you say, flexibility. In a group, that means having diversity of traits and talents.

Not everyone is going to be up on current events and able to reason through the fog of disinformation. Some will merely be hard workers with good attitudes. Others will have special talents that do not immediately come to mind, such as making peace, keeping hygene together, accounting, management of a workforce, creative procurement of necessities, dependable childcare, cooking and so forth.

These skills are often found in people to whom peak oil news is a tedious distraction. We're lucky to be advance-warned of impending changes, but the value of our prescience will diminish as these changes actually arrive. Then the needed resource will be people who are competent at getting along, doing a day's work cheerfully, and contributing talents we never knew they had.

I'm sticking with the inclusive model. You gotta get your own stuff together, and stick with competent and sane partners. But I'm going to reach out cautiously to those who have good character and a willingness to help out, even if they don't seem to have "expertise" in key skills. Most of what needs done will not take that much expertise, and quick learners with good attitudes may move into new niches, displacing cranky experts.

Eyeballs, so our debate is about the risk we are prepared to take to address the diversity issue. Fair enough, and good luck. I am active in my wider community, and see this activity as a vital step in preparation. How? As a volunteer fireman, school association member, neighbour, parent, member of landcare group. All these activities bring me into contact with those who are "people to whom peak oil news is a tedious distraction". I am in a position to form a view as to which of the people I come into contact with are going to enhance my future, and will welcome them with open arms. There are some who will not enhance my future, and they will find themselves unwelcome, as will those I do not know, who present as a threat. Living where I do, and knowing what I know about my community I consider the probability of being confronted with an agressive intruding force to be a relatively unlikely event.That does not mean it should not be prepared for, as the price of failing to prepare could well be terminal.On community, I think there is a lack of focus on the need to be connected to community and the means of achieving that result. It is a simple process. There are a huge number of organisations seeking volunteers to fill any number of roles. Go and help. You will meet people, most of them of good heart. In most rural communities this process will put you within 1 degree of seperation of the entire community. In my experience that is enough to break down any hostility stemming from being "unknown". The problem anyone not yet engaged in this activity will have is that it takes time. In my case it has taken ten years. It could be done quicker, but be warned, too much haste will make the locals wary, and be counter productive. HOWEVER, and this is the kicker, it will only help is you live in a distinct geographic community with a small population. City dwellers will find this approach does not work. Hence my view that if you want to survive deindustrialisation you will need to live in a rural environment, preferably well away from heavily populated urban centres.